Meeting a Federal Highway Trust Fund Crisis

On Feb. 28, 1961, President John F. Kennedy recognized a threat to the nation’s future economic growth and acted accordingly.

The problem: The user-based revenue stream going into the Highway Trust Fund was not sufficient to sustain the level of authorizations necessary to keep the highway program running without going into deficit spending.

The solution: Kennedy offered what he called “A New Plan to Finance the Highway Program.” He urged Congress to sustain the federal gas-tax revenue stream and increase the user fees on trucks.

The outcome: On June 29, 1961, Congress approved the Federal Aid Highway Act of 1961, (Public Law 87-61). The Highway Trust Fund crisis was averted. Construction of the 41,000-mile Interstate Highway System and ongoing improvements to the 848,677 miles of state roads deemed worthy of federal investment due to their importance to the nation’s economy and security continued.

So what’s the crisis today? The problem with the gas tax as a revenue generator is that the rate has been frozen for 20 years and has never been indexed, or adjusted, to keep pace with inflation or to meet identified needs. If Congress had indexed the 1961 federal gas-tax rate of $0.04/gallon to future annual inflation, the gas tax alone would generate almost $56 billion this year for Highway Trust Fund investments and there would be no 2014 HTF crisis looming on Oct. 1 that could shut off federal investment for state transportation department highway, bridge, and transit projects during FY 2015.